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2003-04 ANNUAL REPORT - Back to Contents Page |
Tracking Performance
| In December
2002 the Prime Minister announced a set of four National Research Priorities.
These national priorities were subsequently incorporated into the Government’s priorities for rural R&D and were formally communicated to the Chairs of the RDCs in March 2003 by the Parliamentary Secretary to the Minister for Agriculture Fisheries and Forestry. In March 2003 Senator the Hon. Judith Troeth wrote to the Corporation outlining seven Government Rural Research Priorities: “…we can be proud of the
achievements of the RDCs in delivering positive outcomes for rural
Source: Letter to RIRDC Chair from Senator the Hon. Judith Troeth 12 March 2003 |
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Returns
on investment and triple bottom line reporting
Over the past seven years
the Corporation has conducted a program of impact evaluations via bene?
t–cost analyses of its research. During the first four years one of the
four research program areas was evaluated each year. For the last three
years the Corporation changed the focus of its evaluation activity from
the program to sub-program level.Last years study evaluated the Rice sub-program
and this year looked at the New Plants sub-program.
The study, by the Centre for International Economics (CIE), used the RIRDC/GRDC guidelines as a basis for the evaluation. While emphasis continued to be placed on identifying and developing methods for evaluating the more difficult to quantify environmental and social impacts the selection of projects for evaluation this year had little identi? able social or environmental impacts. The evaluations are undertaken in two stages. The first stage developed an overview of all projects in the New Plants Sub-Program.
This overview provided a general picture of the impact of all projects and their classification into themes and groups so that a sub-set could be chosen for detailed benefit–cost evaluation.
The second stage involved a detailed evaluation of 18 completed or nearly com-pleted projects of the 258 projects identified in stage 1. This represents around 10 per cent of the investment by RIRDC of 18.9 million over the last 14 years. Although 18 projects were covered by the evaluations, five summary benefit–cost evaluations are reported. This was because several projects were identified as being part of a single R&D effort.
What was found
As has been the case in
previous years, a significant effort was involved in documenting in detail
the results of the first stage of the study. This stage involves a detailed
description of all of the 258 funded projects and grouping them into research
areas and research efforts. The major funding focus has been on produc-tion
issues with 64% aiming to develop technologies to improve competitiveness
and sustainable development.
The rest focused on industry training and devel-opment–16.4%, markets – 11.2%, communications – 3.5%, processing – 3.1% and distribution – 2.2%. It was also found that emphasis on basic or funda-mental research has been reasonably high at around 34% of funding, with applied research around 60% and development about 6%. This assessment of all projects provided the basis for selecting projects to be evaluated in more detail.The detailed project evaluations reported in the second stage report indicate a range in rates of return to the projects evaluated (see Table 1).
The average net bene? t to investment ratio (NBIR) for the projects evaluated was about 34 with a range from 6 to 103. The average internal rate of return (IRR) was about 28% with a range from 13 to 45%. For two of the sets of projects the future outcomes remain highly uncertain so two scenarios are presented (an upper and lower scenario) for these evaluations. These investment performance indica-tors suggest that the returns to new plant research is variable, but can be high. All but one project met the prospective new industries IRR benchmark of 15%.
The challenge is to be able
to identify which R&D will have high returns ex ante, prior to the
investment being made. The benefit-cost ratios are also estimated where
there are substantial implementation costs. These are substantial where
industry development has been viable largely due to the research undertaken.
The benefit-cost ratios range from 1.5 to 2.9, reflecting the relatively
modest aggregate returns for the industries. As is seen from Figure 1 the
investment returns for new plants are similar to those esti-mated for other
prospective new industries and emerging industries estimated in all other
years.
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Estimating
adoption
Estimating adoption is a
critical element in evalu-ating the impact of the R&D projects. There
are four main pathways for adoption. These are com-mercial production of
a product embodying the R&D, communication of R&D ?ndings to produc-ers
directly or via other agents of change, build-ing capacity (skills and
knowledge) of producers through training and/or provision of training materials,
and providing information that changes policies or regulations governing
the conduct or production decisions in industries.
The effective pathways depend in part on the nature of the R&D findings and on the structure of the industry and its modes of communication. New plant industries often involve only a small number of producers and a relatively high share of producers in any industry are likely to be involved in the R&D with resulting indirect communication of the findings. This was the case for black truffles, coffee irriga-tion and to a lesser extent jojoba and coriander. Communication of the findings on olives, on the other hand, must be through the industry communication mechanisms, and the resulting adop-tion rates as a result are more uncertain.
There are also natural limits on adoption rates that arise. This results when the R&D is highly targeted to address issues that impact on only a share of the industry production. The coffee irrigation R&D conducted, for example, is only relevant to areas with variable rainfall and limited water resources. Other restrictions can also limit adoption, such as the control over varieties, where the R&D identi-?ed the varieties that would be disease resistant, as in the case of coriander. Or, as in the case of olives, new variety uptake is limited by the expan-sion rate of the industry.
In the case of new industries
where all produc-tion embodies the new technology (black truffles) or when
expansion of the industry occurs only because the R&D has solved problems
that had rendered the product unviable, adoption rates are 100 per cent.
In these situations the adoption profile mirrors the expansion of the industry.
Technologies may also have a discrete ‘shelf-life’ and hence there is disadoption
as longer term solutions to problems are developed. This is the case for
the coriander R&D evaluated. Adoption profiles develop for each of
the R&D findings are described in detail in the study. Table 2 summarises
the adoption rates used in the evaluations.
The triple bottom line
impact
In the last two years an
attempt was made to rig-orously embrace detailed triple bottom line assess-ments
in selected project evaluations. It did this by mapping economic, environmental
and social outcomes, see figure 3.
In the context of the new plant industries evalua-tion, potential environmental and social benefits were identified for much of the R&D, but there was no evidence available to con?rm that these out-comes had or would arise. This is a result largely of the scale of the new plant industries being evalu-ated. For example, while jojoba is a deep rooted perennial that is relatively salt tolerant, the scale and the location of plantings is not yet sufficient to result in any off site environmental benefits. Similarly, the coffee irrigation work will overtime reduce the amount of water used on the crop. This provides potential environmental benefits, but given the small scale, and impact on recharge will be insignificant.
The main social benefit offered by new plant indus-tries is that they provide a wider range of choices to farmers to diversify their income sources. The R&D into new plant industries helps to reduce the uncertainty over investments in new plants by providing factual information that will assist inves-tors with decisions on whether to invest, and how best to manage production. These benefits arise from the program as a whole rather than from individual R&D projects.
Meeting the Government’sNational and Rural Research Priorities
Section 74 of the Occupational Health and Safety Act 1991— Reporting
Section 74 of the Occupational Health and Safety Act 1991 sets out requirements to be included in the Corporation’s Annual Report. In a formal sense, our occupational health and safety policy framework codified in the Sta? General Terms and Conditions. These were reviewed in September 2002 and run for a two year period from 1 October 2002. Copies of the Sta? General Terms and Conditions are available on request. No claims were lodged with Comcare in 2003–04.
Our reporting against the requirements of S.74 for 2003–04 is as follows:
S.516A of the Environment Protection and Biodiversity Conservation Act 1999 - Reporting
